Trina Solar (NYSE:TSL), the worlds largest solar panel manufacturer, published a better-than-expected set of first quarter earnings, driven by strong external module shipment growth (+54% y-o-y) and falling manufacturing costs (blended cost per watt down 6%). However, the company’s outlook was somewhat mixed. While the firm reiterated its full year shipment guidance, it cut its downstream PV connections outlook, also indicating that module pricing could remain under pressure going forward. Below we provide some key takeaways from the company’s earnings release. 
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- External module shipments growth was driven primarily by markets such as China, the U.S. and India. Sales to India doubled on a year-over-year basis.
- ASPs declined as expected, amid competitive pressures in the global solar market and the company largely expects the trend to continue going forward.
- Gross margins declined on account of a lower mix of project sales and weaker pricing. The company expects margins to remain at “mid-teen” levels through the rest of the year. 
- In-house manufacturing costs declined by about 17% year-over-year amid manufacturing and efficiency improvements.
- Blended costs per watt declined at a slower pace year-over-year, as the company continued to source a portion of modules from third-parties.
- The value of the downstream solar assets held on Trina’s balance sheet rose by over 600% year-over-year, likely driven by its Chinese project assets. The company’s progress in selling these projects will be a key factor to watch in the near term.
FY 2016 Outlook
- Trina Solar maintained its overall module shipments guidance for the year.
- The company cut its downstream PV connection target for the year and also expects to see a lower mix of shipments to its downstream projects, on account of low visibility of installation targets in the Chinese market.
- Q1 2016 Earnings Press Release [↩]
- Trina Solar’s (TSL) CEO Jifan Gao on Q1 2016 Results – Earnings Call Transcript, Seeking Alpha, may 2016 [↩]